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Before A Night at the Opera (1935) had even hit the theaters, writers were already at work on a script for MGM's second Marx Brothers film. But it would take half a dozen writers over a year and a half and eighteen different scripts before Irving Thalberg, the head of production at MGM, would give A Day at the Races (1937) the go-ahead. Scriptwriter George Seaton recalls the process they went through, "Mr. Thalberg was most kind and he would say, 'I think this script is a good one fellas. Now I'll tell you what to do: Start over again.' He would instruct us to 'save this scene' or 'save this character' and we worked and we worked."

In the final version of A Day at the Races, Groucho, Harpo, and Chico rush to save the Standish Sanitarium from bankruptcy. Unless the hospital's owner, Judy Standish (played by Maureen O'Sullivan, best known as Jane in the Tarzan films), can pay the mortgage, she will have to sell it to Mr. Morgan (Douglass Dumbrille). Morgan owns the local racetrack and wants to turn the hospital into a casino. Groucho plays Dr. Hugo Z. Hackenbush, a veterinarian who poses as a medical doctor to try to get money for the hospital from the wealthy Mrs. Upjohn (Margaret Dumont). Harpo plays a jockey and Chico is a racing tipster; both are friends of Judy's. Author Juliette Friedgen states, "As in all of the Marx Brothers films, the gags in A Day at the Races are the most important things, not the believability of the plot."

A Day at the Races faced a few legal problems. The original name for Groucho's character was Dr. Quackenbush. Everyone agreed it was a ridiculous name for a doctor, but then they discovered thirty-seven actual Dr. Quackenbushes in the United States. Since most of them were eager to sue if their name was used, Groucho's character was changed to Hackenbush. At first Groucho was disappointed in the name change, but he grew to love Hackenbush so much that he even signed it to letters.

Another lawsuit actually made it to court. A woman once sent Groucho a note asking, "Wouldn't it be funny if you three nuts ran a hospital?" Since the plot of A Day at the Races has Groucho running a hospital, the woman sued MGM for plagiarism. The scriptwriters had to testify and go through all eighteen scripts explaining the evolution of the story.

As with A Night at the Opera, the Marx Brothers followed Thalberg's suggestion and went on a cross-country road show in support of A Day at the Races. This gave the brothers the opportunity to see how audiences would react to comedy sequences they were planning for the film. Each week the writers focused on a different scene by changing the wording to see what got the best reaction from the audience. George Seaton said, "by the time we got back to the studio after six or eight weeks on the road we could take an average and know exactly how many seconds a laugh would last. In this way, Sam Wood in directing or editing could cut to a reaction shot until a laugh died down so that the audience wouldn't miss the next line."

Less than two weeks after filming began on A Day at the Races, 37-year-old Irving Thalberg died of pneumonia. According to Joe Adamson in Groucho, Harpo, Chico, and Sometimes Zeppo; A History of the Marx Brothers and a Satire on the Rest of the World, "It was a big blow not only to the Day at the Races company, not only to the whole Irving Thalberg production unit, not only to the entire MGM studio, but to everybody who had ever had anything to do with making a movie. Hollywood was full of people who either respected him professionally or felt very close to him personally, or both." Thalberg had already approved the story for A Day at the Races before his death, but many believe the film didn't live up to A Night at the Opera because Thalberg wasn't there to make daily decisions during filming. Years later, Groucho admitted, "After Thalberg's death, my interest in the movies waned...The fun had gone out of filmmaking." Even without Thalberg's presence, A Day at the Races earned four million dollars at the box office, a record for the Marx Brothers.